News Now

CU System

Florida subcommittee rejects CU municipal deposits bill

TALLAHASSEE, Fla. (1/24/12)--The importance of grassroots advocacy hit home for Florida credit unions when they were defeated by one vote in a state House subcommittee that rejected a bill that would have allowed credit unions to accept municipal deposits.

The House Insurance and Banking subcommittee voted down, 7 to 8, House Bill 669, which was introduced by state Rep. Jason Brodheur (R-Sanford). It would have allowed qualified public depositories to include credit unions, thus allowing municipalities a choice of where to do business.

Banks argued against the bill, saying that credit union should not serve local government because they "don't pay taxes," said League of Southeastern Credit Unions (LSCU) President/CEO Patrick La Pine in an editorial Saturday in the Florida Times Union. "Now banks will continue to enjoy a virtual monopoly," he said.

In the editorial La Pine noted that credit unions do pay tangible personal property taxes, real property taxes and employment taxes, and that their income tax exemption lies in their nonprofit structure--cooperative ownership and volunteer leadership--not because of their size or the type of services they provide.

Florida has 40 Subchapter S banks that, like credit unions, receive an exemption from corporate income taxes, "yet are allowed to serve the state as qualified public depositories," he added. For the full editorial, use the link.

What's next? "The biggest step is to have our credit unions engage our lawmakers more so that they can educate them on the differences between a credit union and a bank, and why credit unions, despite their tax exemption, would be proper institutions to serve the state as qualified public depositories," La Pine told News Now.

"We were certainly out-hustled by the banks when it came to grassroots advocacy on this issue, and we need to do a better job of getting our message to lawmakers from the people in the field," he added.

"The vote illustrates the importance of grassroots advocacy and getting the credit union message to lawmakers," said La Pine. "Our lobbyists can do so much and did, as evidenced by having a hearing, having the support of the majority and minority offices, getting the support of the League of Cities, and having such a close vote. By having our advocates out there, it very well could have flipped one vote, and we'd be looking at an 8-7 victory as opposed to a 7-8 defeat."

An amendment, offered by state Rep. John Wood (R-Haines City), would have required any credit union accepting public deposits to waive its tax exemption. The league and Florida Commerce CU General Counsel Andy Price, who testified on behalf of credit unions for the public deposits bill, succeeded in defeating that amendment. However, "that too was a close 7-8 vote," said La Pine.

The only way to introduce a bill in Florida is to have a member of the legislature sponsor the bill. It would need to be passed identically through both chambers. Although there are ways to amend legislation throughout the process, once a bill is introduced, heard in committee, and fails, that subject is no longer available to be heard as an amendment, said the league.